Trump Demands Iran Surrender as War Upends Global Markets

Summary

Balance of Power — Bloomberg

Episode: Trump Demands Iran Surrender as War Upends Global Markets
Date: March 6, 2026
Hosts: Joe Mathieu, Kailey Leinz (various correspondents and guests)

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Overview

This episode analyzes the escalating Iran conflict and its dramatic effects on global energy markets, political maneuvering in Washington—including the shakeup at the Department of Homeland Security—and economic signals from the latest US jobs report. The hosts speak with energy experts, political commentators, and policy analysts to break down what these fast-moving events mean for global markets, the Biden and Trump administrations’ strategies, and the upcoming US midterm elections.

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Key Segments & Insights

1. Energy Crisis: Iran Conflict Drives Oil Shock

Timestamps: 00:55–11:45

• Oil Surges to $90/barrel

  • The show opens with urgent reporting on oil prices, noting a 12% spike in West Texas Intermediate crude; gasoline and refined product prices are expected to surge imminently.
  • Joe Matthew: “This is a big deal. …The White House is acutely aware of this issue. …President has said he's not worried as soon as this is done in Iran, price is going to come back down.” (00:55)
  • Kevin Hassett (former White House economic adviser): “We know that sometime soon we're going to have a much more stable Venezuela with high stable energy output, a much more stable Iran with high unstable energy output which is going to be very good not only for energy markets but for risk premia around the world. Don’t forget that this move Iran is happening because they've promised to destroy us all.” (01:38)

• Strategic Petroleum Reserve and Waivers

  • Treasury offers sanctions waivers allowing India to buy stranded Russian crude, aiming to ease global shortages.
  • Hassett notes the SPR holds ~400 million barrels but says no release is currently planned, as the administration believes the operation in Iran is “ahead of schedule.”
    • “There is no conversation right now to dip into that, but we've got something like 400 million barrels ready to go if needed.” (03:42)

• Refined Product Shortage and Strait of Hormuz Closure

  • Tom Kloza (Gulf Oil Chief Oil Adviser) warns jet fuel may soon reach $200/barrel; predicts $3.50–$3.75/gallon gas imminently, possibly $4/gallon in some markets (05:41).
  • “The Strait of Hormuz needs to be reopened and how they do that is questionable at this moment. …We're talking 15 or 16 million barrels a day of crude oil and then 5 or 6 million barrels of their Refined products.” (07:18, Tom Kloza)
  • Rapid technology change has made disrupting oil flows easier (drones, missiles), making today’s scenario even more precarious than past crises. (08:19)

• Long-term Stability vs. Short-term Pain

  • Kloza agrees with administration that, if the Strait is reopened, markets could stabilize in the second half of 2026, reverting to what had been predicted to be a “sloppy year for crude oil.” (11:08)

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2. Washington Power Moves: DHS Shakeup

Timestamps: 12:50–25:18

• Senator Markwayne Mullen Nominated as DHS Secretary

  • President Trump reassigns Kristi Noem to an obscure “Shield of the Americas” role, replacing her with Oklahoma Senator Markwayne Mullen.
  • Discussion revisits Mullen’s reputation as a literal and figurative fighter—black belt, MMA background, and a notorious near-altercation with union boss Sean O’Brien in a Senate hearing. (14:34–15:01)
    • “If you want to run your mouth, we can be two consenting adults. We can finish it here.” (14:36, Markwayne Mullen)
    • “You’re a United States senator.” (14:50, Joe Matthew)

• Political Calculations and Fallout

  • Jeanne Shah Zaino (Bloomberg contributor): Mullen is expected to pass confirmation quickly but will face tough questioning, especially from within his own party. (16:33)
    • “Mullen recently called Rand Paul a freakin snake. So there should be fireworks not only from the Democrats, but we may see some from the Republicans as well.” (16:33, Zaino)
  • Rick Davis (Republican strategist): “A bit of a firebrand…at the end of the day, this is a done deal and I think you probably see this move pretty quickly.” (15:49)

• Oklahoma Senate Seat Dynamics

  • The appointment triggers a scramble for Mullen’s soon-to-be-vacant seat; by state law, the person appointed can't run for the full term, setting up a fast-tracked primary that favors Republicans with Trump's likely endorsement. (18:33)

• Noem’s Exit and White House Priorities

  • Analysis sees Noem’s demotion as connected less to policy and more to internal politics and White House discomfort with her handling of DHS and public criticism.
    • “It has very little to do with change of ICE tactics…They want her out…but Markwayne Mullen is going to find himself having to execute on the same really unpopular ICE tactics that she was.” (20:49, Zaino)

• Democrats’ Perspective

  • Democratic Senators are unlikely to see Mullen’s appointment as grounds for new negotiations on DHS funding or tactics.

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3. Foreign Policy: Trump’s Iran Gambit

Timestamps: 26:19–38:21

• Military and Diplomatic Moves

  • Mark Short (fmr. chief of staff to VP Pence): Outlines that Homeland Security policy will be run out of the White House, particularly by Stephen Miller—not the new secretary.
    • “The policies…are really guiding…the Department of Homeland Security…are going to be driven by the White House and particularly by Stephen.” (27:53)
  • Trump’s call for Iran’s “unconditional surrender” is noted as a bold, controversial, and risky move.

• Regime Change and Lessons from History

  • Christina Ruffini (Bloomberg): “The odds are slim that the United States is going to have a real say into who the next leader of Iran is…There is a long standing issue with puppet governments…” (35:28)
  • Despite massive US/Israeli airstrikes, there’s still no widespread uprising or mass defection in Iran; communication blackouts and regime repression remain major obstacles. (36:40)
    • “It’s really hard to organize a protest…if you can’t even talk to one another.” (36:57, Ruffini)

• Congressional Response and Military Funding

  • Congress expected to approve a large supplemental Pentagon funding request related to the Iran campaign.
    • “You see a pretty large ask. … In the time of war those are generally approved by Congress and it proceeds if you’re voting against our troops…” (32:45, Mark Short)
  • Short reminds listeners that while defense spending increased massively, by % of GDP the US is still at post-WWII lows. (34:03)

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4. Economic Fallout: Labor Market and Inflation

Timestamps: 39:19–47:43

• Jobs Report Signals a Slowdown

  • Liz Pancati (Groundwork Collaborative) points to the loss of 100,000 jobs—driven in part by strikes in healthcare—and broad stagnation or declines across key sectors.
    • “If you take the last three months of job growth and you average them, you get about zero. …Not sure that’s what you’re looking for in a roaring economy.” (42:03, Pancati)
  • Wage growth slowing, labor force participation and employment-population ratios fall, erasing years of progress.

• Inflation and Consumer Pain

  • War and tariffs compound supply shocks: higher oil prices, higher commodity prices, looming $4/gallon gas, and expensive airfare.
    • “JET fuel is up massively. Summer airfare is going to be a problem and so will prices at the pump.” (43:35, Pancati)
    • “Consumers are going to be really taking it from both sides. …They were already struggling with the tariff picture...” (44:11, Pancati)

• Fed Between a Rock and a Hard Place

  • Stagnant jobs data plus rising prices complicate the Federal Reserve’s policy response.

• AI and the Job Market

  • Modest productivity gains from AI, but so far no widespread sectoral transformation. However, companies are using AI for pricing, increasing margins, which could further burden consumers. (45:10)

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Notable Quotes

• On Global Energy Risks:

  • “Don’t forget that this move on Iran is happening because they've promised to destroy us all. Like if that’s not something that affects risk premium, I don’t know what is.”
    —Kevin Hassett (01:38)

• On Tanker Disruption in Hormuz:

  • “The Strait of Hormuz needs to be reopened…We're talking 15-16 million barrels a day of crude oil. … We've seen it manifest itself more on the refined product side…particularly for diesel, heating oil, jet fuel…”
    —Tom Kloza (07:18)

• On DHS Power Politics:

  • “Mullen recently called Rand Paul a freakin snake. So there should be fireworks not only from the Democrats, but we may see some from the Republicans as well.”
    —Jeanne Shah Zaino (16:33)

• On Iran Regime Change:

  • “The odds are slim that the United States is going to have a real say into who the next leader of Iran is. …There is a long standing issue with puppet governments…”
    —Christina Ruffini (35:28)

• On the Jobs Market:

  • “If you take the last three months of job growth and you average them, you get about zero…We also saw pretty concerning ticks down…we wiped out about four years of gains in both of those…”
    —Liz Pancati (42:03)

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Memorable Moments

• Replaying Mullen vs. O’Brien Senate Fight (14:34):

  • Displaying how Mullen’s pugnacious style became part of his political narrative; a rare moment of legislative drama replayed for context.

• Analysis of White House Reassignments:

  • “We just reassign people now? You send them to another parish in this second term?” (31:19, Joe Matthew)—a quip on the Trump administration’s approach to Cabinet “firings.”

• Puppy “Redemption” Postscript (24:45):

  • “Can we just agree that this was some redemption for Little Cricket, the puppy that Kristi Noem killed.”
    —Jeanne Shah Zaino, referencing a notorious past controversy in light of Noem’s ouster.

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Conclusion

This episode expertly threads complex, fast-moving topics: the acute energy spikes caused by war with Iran, Washington’s hard-nosed internal politics amid a government shutdown, the economic pain felt at the consumer and labor market level, and geopolitical uncertainty as the US presses for Iranian surrender and contemplates regime change. Throughout, Bloomberg’s team and expert guests bring candor, skepticism, and inside knowledge—making clear that both the markets and the US government face extraordinary volatility as war and political calculations upend “normal” business.

Useful For:
Anyone seeking to understand how international conflict, White House staffing drama, and evolving economic data intermingle to shape US politics, markets, and the global outlook in 2026.

Transcript

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[Joe Matthew]

Oil's an issue guys. We're at $90 a barrel. If you're just tuning firing up the terminal. This is not Brent, this is West Texas Intermediate. You heard Charlie, we're up about 12% right now. We're not fooling around. This is a big deal. We went red when it crossed 70 the other day and that's where we are now at 90. And of course the White House is acutely aware of this issue. There have been talks about potentially tapping the SPR and President has said he's not worried as soon as this is done in Iran, price is going to come back down. And Kevin Hassett didn't seem too worried either when he appeared this morning on Bloomberg TV and radio. Listen to what he said about the impact on energy prices.

[Kevin Hassett]

We know that sometime soon we're going to have a much more stable Venezuela with high stable energy output, a much more stable Iran with high unstable energy output which is going to be very good not only for energy markets but for risk premia around the world. Don't forget that this move Iran is happening because they've promised to destroy us all. Like if that's not something that affects risk premium, I don't know what is. And so I think with an eye on the horizon then you can see that this is a huge positive for global the global economy and global markets. The question is, you know, when will the current near term disruption end? And that's something that will be decided by the military and they'll of course will be some uncertainty about when they decide to move in part because the uncertainty protects the lives of American soldiers,

[Joe Matthew]

Kevin, in the meantime.

[Kevin Hassett]

But we expect that it'll be resolved evolved quite soon.

[Joe Matthew]

As you see, we're starting to see a hit to production because we can't move the oil. We're breaching storage capacity and select producers right now. You saw some of that with Iraq earlier this week, the Journal reporting moments ago. We're seeing the same thing in Kuwait and UAE and Saudi Arabia. My follow, that's obviously a bigger, more acute issue for the Asian refiners right now, which is why the treasury secretary

[Rick Davis]

came out and issued a waiver for

[Joe Matthew]

the Indians to buy from Russia the Russian crude that's offshore in tankers right now. But Kevin, I wonder what else the White House has got in store. Not just to tell people to wait because in the future will be better, but what are the remedies that you can produce right now?

[Kevin Hassett]

Oh, sure, the, you know, the, the sanction waiver that Secretary Busser came out with is just one of many, many tools that we have ready. We've got a whole flowchart of tools to use depending on this or that, and we're ready to move them as soon as we have to. But we're also very opt optimistic that we're going to be able to get this near term problem resolved relatively quickly.

[Rick Davis]

The Biden administration, as you know, burnt

[Joe Matthew]

through the spro, took it down quite dramatically. Is there space left in the SPRO to deploy some of that to bring down prices just a bit for consumers?

[Kevin Hassett]

You know, there is no conversation right now to dip into that, but we've got something like 400 million barrels ready to go if needed. But there is I re emphasize that there has not been a conversation to dip into that yet because our expectation is that this effort in Iran is way ahead of schedule and that we understand that there are near term market fluctuations. But we have our eyes on the horizon and we think that's where people should be looking to.

[Joe Matthew]

Kevin, you say ahead of schedule. Is there a schedule?

[Kevin Hassett]

Yes, but obviously we're not going to go through the schedule on tv.

[Joe Matthew]

Well, we'd love to hear it even off TV because there have been so many questions about timeline here. I will add another log on the fire here as Qatar halts production of liquefied natural gas LNG Qatar expects all Gulf energy producers to shut down exports within weeks if this continues, potentially driving oil to $150 a barrel according to the country's energy minister. Now we've got a couple tough headlines here, of course on the terminal. I already talked about crude oil at 90. It's coming through the other end though. And gas prices now looking at the highest gas prices ever under a President Trump. Not great as we get above the $3 level on a national average. Not great considering the midterm campaign cycle that we're entering. That's the political side of things. We want to stick with the energy side of things and bring in Tom closer. This is one of the first phone calls that we made when missiles started flying last weekend. Tom's been in this space for a long time and I've had the pleasure of talking to him for the better part of 20 years as an oil trader, as an analyst. He is now chief oil adviser at Gulf Oil. And Tom, it's great to see you. How high could we go here and how worried are you?

[Tom Closer]

Well, I think that we're talking about an abstraction when we we're talking about the price of crude oil right now. I went ahead and looked at what one might expect for gasoline prices with crude at $90. I thought I had some time. I did that this morning and we're already above 90. But we're going to see it manifest itself at the pump. I think we're going to see 350 to 375 almost immediately, certainly before St. Patrick's Day. And if we stick around or we move higher and we've been moving higher by like 6 and 12% every, we're going to see a return of $4 in a bunch of different markets. You know, the one thing, Joe, is that we're talking about $90 for crude and that's really exciting. Gasoline is costing on a spot basis without taxes, anywhere from like 125 to $134 a barrel. Now, diesel's about $150 a barrel, no tax. And jet fuel, that's about 185. And that may be the first product that hits $200 a barrel, which I don't think. Well, no, we did see some of those numbers back in the 2022 Russia Ukraine war.

[Joe Matthew]

Remember the spike we saw at that very time. This was of course inspired by Russia's invasion of Ukraine. Now it's the United States that's initiating conflict here. Do you expect similar levels? Will Donald Trump have the similar experience that Joe Biden had?

[Tom Closer]

Well, it's possible. When I heard Kevin has talking about flowcharts, that may not worry me a little bit. This isn't going to be solved with flowcharts and Excel spreadsheets. I mean, the straight up Hormuz needs to be reopened and how they do that is questionable at this moment. But we're talking 15 or 16 million barrels a day of crude oil and then 5 or 6 million barrels of their Refined products. We've seen it manifest itself more on the refined product side and particularly for products like diesel heating oil, jet fuel, marine gas oil that were very, very tight despite the glutton crude and the blood and gasoline. So it's changing very quickly. I do think that a month from now, we're going to be looking at something different because I just don't believe that this can be allowed to happen for weeks upon weeks.

[Jeannie Shan Zaino]

Wow.

[Joe Matthew]

Okay. To what extent can any of this be rerouted by. By vessel or by pipeline?

[Tom Closer]

Tom, they are rerouting some things. Saudi Arabia has the most wherewithal to do that. They can move things to the Red Sea port of Bamboo. Kuwait, not so much. The Emirates, not so much. So you really do need the strait reopened. I mean, I'm guilty, like most people, of thinking they couldn't possibly shut down the street of hormones. But when you think about it, you think about the technology now, the technology of 10 or $20,000 drones that can knock out billions of dollars of infrastructure and certainly could knock out some of these expensive vessels. That's the big game changer. You know, back in 1985 or 86, you did have escorts, take vessels through the region, but you didn't have drones and you didn't have a lot of the missiles that you have out there right now in that Cape version.

[Joe Matthew]

Ability. Yeah. I've always been fascinated by the hats that oil analysts, energy analysts and traders need to wear. You have to be a geopolitical expert to work in this space, which is why it's always fascinating to talk to you guys. Now, Chris Wright knows a lot about this, too. He's not projecting it so much in interviews. He showed up on. On Fox earlier to talk about. I guess we could frame his lack of concern about this issue. Here's the Secretary of Energy. I think it's of order. Weeks, I would say, in the worst case. But it's weeks, not months. And look, Iran has been an escalator of energy prices 47 years, the whole history of their regime. We've got a little bit of an interruption right now to finally put an end to their ability to wreak havoc, to kill Americans and to terrorize their neighbors. A little interruption right now, Tom, it doesn't sound like that's how you're characterizing this.

[Mark Short]

Yeah.

[Tom Closer]

But let me tell you where they're coming from. You know, you've heard this administration talk a lot about energy dominance, and energy dominance really started with the high prices in the Arab Spring 15 or 16 years ago. And with the shale revolution. If you were having Olympics for continents, the North American continent is so superior to every other continent right now. We've got cheap natural gas, we've got cheap crude oil much cheaper than the rest of the world. We've got world class refineries and world class technology. And you know, we're producing just between the United States and Canada about 17 or 18 million barrels a day of crude. So I understand that compared to the rest of the world, North America and particularly the United States is in great shape, dominant shape.

[Joe Matthew]

Only got a minute left. Tom, do you agree with the administration that the long term story here is a more stable energy market?

[Tom Closer]

We would agree with that, yeah. I think, you know, you never know when these things happen how long it's going to take to play out. But 2026 was shaping up as a very, very sloppy year for crude oil. And if they get the straight reopened, it'll at some point go back to that sloppy nature probably in the second half of the year. There's a reason why banks who are predicting 90 or 100 or even $120 right now that they're predicting something in the 60s for, you know, the back half of the year. And I think that unless it really blows up in the region, we can get there.

[Joe Matthew]

Tom, I'm glad you're still at it. Tom, closer with Gulf oil if you didn't get the hint on YouTube. Tom, thank you so much. $90 a barrel. Our reality today. This is Bloomberg. Stay with us on balance of power. We'll have much more coming up after this.

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[Joe Matthew]

11:30 is the day after for Christine O, I guess for Mark Wayne Mullen as well. Two pretty different scenarios here and two pretty different politicians. As the President of the United States reassigns Secretary Noem to a new role. What is this, the Shield of the Americas? James is that the. Nobody's ever heard of this. It'll be introduced this weekend, something that presumably came out of a Marvel movie. Mark Wayne Mullen, on the other hand, he's going to hang it up as the senator from Oklahoma and run dhs. And it's been amazing reading about Mark Wayne Mullen because everyone reaches for the same line. Mullen, comma, known to be a fighter, comma, it's a. I actually put it in Google and it turns out that he is not just a fighter, he's a black belt. He's like an MMA guy. Did you guys know this? Brazilian Jiu jitsu? He has a Brazilian Jiu Jitsu black belt so he could kill you with his bare hands, by the way, has a 5 and O record and was, in fact, inducted into the Oklahoma Wrestling hall of fame in 2016. I wonder if Sean O' Brien knew that when they almost came to blows in the hearing room. I'll tell you what you want to talk about Mark Wayne Mullen, the fighter. He even took his ring off when the. Do you remember this? The head of the Teamsters was up there testifying. Sean o', Brien, and he had been kind of trolling Mullen online on social media, talking about him. And, well, Mullen had just about heard enough, as Bernie Sanders, the chair of that committee, realized a bit too late. Remember this? This is just a couple years ago, sir.

[Rick Davis]

This is a time.

[Joe Matthew]

This is a place if you want

[Rick Davis]

to run your mouth.

[Joe Matthew]

We can be two consenting adults. We can finish it here.

[Mark Short]

Okay, that's fine.

[Joe Matthew]

Perfect. You want to do it now? I'd love to do it right now.

[Rick Davis]

Well, stand your butt up then.

[Joe Matthew]

You stand your butt up. Oh, hold on. Stop it.

[Bloomberg Host]

Is that your solution?

[Mark Short]

Every problem?

[Joe Matthew]

Okay, you know, you're a United States senator.

[Mark Short]

You're an embarrassed silence.

[Joe Matthew]

This hearing is about the condition of

[Rick Davis]

the working class in America.

[Joe Matthew]

That's why we're. You're the biggest thug here. Listen, if you're with us on 92. Nine, you know, well, you don't pick a fight with a kid from Dorchester. But Mullen did. And we assembled our political panel to talk about, well, the political fallout. Jeannie Shan Zaino is with us, our, of course, Bloomberg Politics contributor and democracy visiting fellow at Harvard Kennedy School's Ashe Center. Rick Davis at world headquarters in New York, Republican strategist and partner at Stone Court Capital. Rick, I wouldn't, I guess, want to meet Mark Wayne Mullen in a dark alley. This all developed while we were on the air yesterday, by the way, and Rick has weighed in a bit here. I'm just wondering what comes next for him if this is going to be an accelerated confirmation process, if he's as good as got the job.

[Rick Davis]

Rick yeah, I think the accelerated process is important because you don't want any lapse of leadership at an important agency like this, especially one that's been shut down for almost 20 days. And the reality too is that he should be able to get senatorial courtesy and fast track through the nomination process. That would be typical. Obviously he's a bit of a firebrand, as you just indicated, and Democrats should probably put up a pretty vociferous opposition to him. But at the end of the day, this is a done deal and I think you probably see this move pretty quickly.

[Joe Matthew]

You might have heard he's a fighter. Genie, what will Democrats do in that confirmation hearing?

[Jeannie Shan Zaino]

Joe my head is still reeling from that intro you just gave. You know, let's just say about his confirmation hearing, it goes through the Department of Homeland Security chaired by a one Senator Rand Paul, who Mark Wayne Mullen recently called a freakin snake. And so there should be fireworks not only from the Democrats, but we may see some from the Republicans as well. To your point, that is how most of us around the country outside of Oklahoma first got to know him, was in this very odd Bernie Sanders refereed fight with o' Brien that didn't come to blows. But good news, Joe. They made up Donald Trump, the peacemaker. He has brought them together as we remember because we all were there. O' Brien spoke at the Republican convention, not at the Democratic. So all's well. I hear even o' Brien yesterday made a statement mildly supporting Mullen. So I think from that perspective, it was just two guys in a Senate committee having a brawl. And I think that Democrats are, Democrats are going to, you know, they will, they will put up a fight, but I think it's there. He's likely to get through this, but I don't know that it's going to change much in terms of the shutdown in terms of dhs.

[Joe Matthew]

Well, you know, these guys are fast friends now, as Cece said, he respects a worthy opponent. There's no way to no better way than to make friends with a fighter than to get in a fight with him. Right. So here we have the Teamsters leader actually endorsing this idea, which is fantastic. Sean o' Brien offering unexpected praise for Mark Wayne Mullen's nomination to lead the Department of Homeland Security. They're fast friends. Now they had like a beer summit or something and big questions about what happens to the seat. And this is really what I'd like to get into with the two of you. What happens to Mullen's seat and what happens to Kristi Noem? Because we understand that the governor, Kevin Stitt, will appoint an interim senator and per state law, Rick, that person must pledge not to run for a full term in November. How is this all going to shake out?

[Rick Davis]

Yeah, you're going to have a group of people probably vying to on both the Republican and the Democratic side to jump into this race. There's still time to get into the primaries in Oklahoma. So you know it. The timing is good. None of these campaigns will have raised any money or positioned themselves with the voters yet. So it'll be a fast track to a primary. But somebody will be a caretaker that'll sit through that seat until January 2027 and you'll have a knock down, drag out fight. Highly likely a Republican will prevail because Oklahoma is a solidly red state. But the primary may not be, you know, that interesting. Unless Donald Trump doesn't endorse, but likely he'll find someone he wants. He'll endorse him and that person will win the primary.

[Joe Matthew]

Interesting. Speaker Johnson, Jeannie told reporters yesterday that Governor Stitt promised him not to tap a House Republican. We can't lose anyone right now, was the quote. And I'm curious to be honest with you as to why he would want this job. He's the United States Senator. He seems to be very well regarded on Capitol Hill as not only a team member for Republicans, but a negotiator. Jeannie. He's been negotiating between the two chambers and between Republicans and Democrats. He talked about during the shutdown sitting down at Democrats kitchen tables and having fruitful conversations with them. But when I heard him talk about the challenges that Kristi Noem faced in the job, it made me think, well, why would he want this? Listen to Mark Wayne Mullen on the steps of the Capitol yesterday. She was tasked to do a very difficult job. And I think she has performed the best she can do underneath the circumstances. Is there always lessons that can be learned? You know, listen, my wife and I, we have over the years, we have been fortunate enough to purchase companies and grow our companies. And every day there's something you can do better. And so I think there's an opportunity to build off successes and there's also opportunities to build off things that maybe didn't go quite as planned. Well, there's going to be a lot that comes with this job. Jeannie, is this a promotion? I mean, I guess he's joining the cabinet, but why do you leave a Senate seat for this?

[Jeannie Shan Zaino]

Yeah. And let's just underscore what Johnson said. Literally, he can't afford to lose one seat. That is quite literal for Johnson. And, you know, Mullen is very close by all accounts to Donald Trump. And here is a guy who went from being an MMA fighter and a plumber owning his own plumbing company into politics about 15 years ago and just this stratospheric rise and in the political realm, finding himself as a senator of the United States, I think it's very, very tough for anybody to say no to the president when called on. So, absolutely. I have no question that he, when the president called, he was there and willing to do what he, what he can and what he's asked to do. I think there is a little bit of, it's a little bit ingenuous of the White House to suggest that, for instance, on this $220 million, you know, Yellowstone Taylor Sheridan style campaign that, that Kristi Noem had that they just didn't know about it. This thing had been out for a year. The president is featured prominently in it. So I think a lot of this has to do with discomfort with Kristi Noem and not just coming from Donald Trump personally, but from Stephen Miller, who late last year was making that clear in terms of her spending. And so they want somebod do their bidding. And I think that is what's most troubling about this. It has very little to do with change of ICE tactics or ICE strategies or the killing of Renee Good and the killing of Freddie. It has to do with a replacement of somebody who blamed her boss publicly for wasteful spending and has done other things and they want her out. But Mark Wayne Mullen is going to find himself having to execute on the same really unpopular ICE tactics that she was with. Absolutely, you know, willingness on the part of the White House beyond the body cameras to pull back on that.

[Joe Matthew]

Hey, Rick. Senator John Kennedy of Louisiana, who played a big role in leading us to this moment following his questioning of Kristi Noem in the hearing earlier this week, said Donald Trump called him after the hearing. The president was not a happy cowboy. The senator said. I remember thinking, this is such classic John Kennedy. I remember thinking, the secretary, quote, pretty much as dead as fried chicken, unquote. What's going to happen to Kristi Noem? Is this new job real or is this a way of sunsetting her as a member of the administration.

[Rick Davis]

Yeah, I'm sure some, you know, interesting person in the White House said, oh, we can't just fire. We've got to give her an exit plan. So they concocted this scenario for the Western Summit Shield. Who knows what that's going to be? And it probably doesn't really matter that much. Maybe she's going to wind up running Venezuela, who knows? But at the end of the day, all eyes are on Mark Wade Mullen. And look, I mean, this is an agency that's in dire need of help, right? They need new leadership, they need new direction, they need new funding. I mean, this is a severe test of leadership that he's going to face. And I don't know if his appointment will break the logjam of funding for an agency like this that has been, you know, frozen in time. But. But we can hope that this is the kind of thing that will get everything back on track and create some kind of an outcome where people can get paid and new policies can be pursued, not just to meet Donald Trump's administration's agenda, but also to build confidence with the American public that the agency's not against American citizens.

[Joe Matthew]

Sounds kind of painful, to be honest. Jeannie. Democrats say that this doesn't change anything for them when it comes to DHS funding, that he needs to still make good on demasking and judicial warrants. He's not about to change his tune on that, is he?

[Jeannie Shan Zaino]

He's not. We've seen no sign of that. And I think that is what troubling. Although Senator Blumenthal, prior to the firing, said, well, if she was removed, it might be easier for us to negotiate. So maybe there's something there, but I still think it's going to have to be substantial. And Joe, by the way, can we just agree that this was some redemption for Little Cricket, the puppy that Kristi Noem killed. 14 months old. And you know Cricket. Cricket needed to see his day. And thank goodness for Donald Trump and Stephen Miller. A bit of redemption for the little puppy.

[Joe Matthew]

Say his name, Jeannie. Say it out loud. With apologies to Little Cricket. Stay with us on balance of power. We'll have much more coming up after this.

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[Bloomberg Host]

You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.

[Tyler Kendall]

I'm Tyler Kendall alongside Joe Matthew here in Washington. And we've had our eyes on the foreign policy front, but we've also seen some major headlines related to to domestic policies in the Trump administration. This week, as you well know by now, we saw President Trump nominate a new DHS secretary, ousting Noem, the current one, and announcing, Joe Matthew, that it's going to be Senator Mark Wayne Mullen, a Republican from Oklahoma who's known to be in some sense a negotiator on Capitol Hill. Because we have to keep in mind dhs, the Department of Homeland Security, is still amid a partial. Well, the DHS is fully closed, but we are still amid a partial government shutdown.

[Joe Matthew]

That's the truth. This is quite a time to be taking the helm at dhs. And of course, you've got a senator who probably could have kept that job for the balance of his career, leaving the Senate to lead this department at a very chaotic time. We have big questions, of course, what happens to Kristi Noem from here? This Shield of the Americas is unknown to us. I guess the president will be unveiling this this coming weekend. But it of course also sets off a fight to fill that Senate seat in Oklahoma. And that's where we start our conversation with Mark Short. Don't worry, we will get to foreign policy with the former chief of staff to former Vice President Mike Pence, former White House Director of Legislative Affairs. Mark, it's great to see you. Happy Friday and thanks for joining us. Why would Mark Wayne Mullen want to do this? This is a seat he could have held for. Right. The balance of his career. Why? Why jump on DHS at a moment of chaos if only you don't say no to the boss?

[Mark Short]

Well, you know, perhaps the Senate isn't as much fun as some people think it is and people want it out. But yeah, I think it could be. But I think it's a really good question that, Joe, because the reality is that I think the policies are really guiding the part of Homeland Security are going to be driven by the White House and particularly by Stephen. And so you know what? Yes. So to what extent are you having operational control as secretary. I think you've seen over the last there were four secretaries in first administration and now one in second administration. This is really, it's not like he's going to have a chance to really direct this himself. So I think it's a fair question to ask. I think it's also, I mean Oklahoma's a safe Republican seat.

[Joe Matthew]

Sure.

[Mark Short]

But you know, a lot of focus has been on the likelihood of the House flipping. There's a big risk to the Senate flipping too. And I think a lot of people assume 53, 47 the maps favorable to Republicans. But we start going through the states of the Democrats recruiting who they want Ohio against the freshmen who they wanted in Alaska. You know, what's happened in North Carolina, Texas, variable. It's like the last thing we need right now is more open seats. And I think, you know, the situation weighed in Montana also is ruffled feathers too. So this creates a lot more consternation in the Senate as well.

[Tyler Kendall]

So I do want to stick with domestic policy. But I am going to mention a foreign policy adjacent headline that's crossing the Bloomberg terminal right now causing Boeing shares to jump more than 3%. Reportedly Boeing is closing in on one of the largest sales in its history of 500 aircraft order for 737 Max jets to be unveiled when President Trump travels to Beijing. This is going to be a deal with China as we know that that trade deal right now is currently up in the air as we just saw the Supreme Court strike down some of President Trump's broad based tariffs. So that's going to be a headline

[Joe Matthew]

that we're tracking 3%. That's a big deal. You know, they were hoping the Biden administration was hoping for a deal like this coming out of COVID It never happened.

[Tyler Kendall]

Right. And it's raising questions too about leverage for President Trump going into this meeting after it was largely seen that he had been offset from the Supreme Court's ruling. So something that I'm sure we'll talk more about later. You mentioned it this hour, but Mark, I do want to bring it back to this conversation. We can keep with the midterms and maybe this kind of threads into it. But I'm wondering if Senator Mullen's selection is more about style versus substance. Are we going to see?

[Mark Short]

You didn't think there's a lot of substance in the previous secretary.

[Tyler Kendall]

No, no, no, no, no. More, more along the lines of a question. Are we actually going to see policy change here when we know Democrats are demanding some changes when it comes to dhs. And maybe there just needed to be a different type of messenger amid what had been bipartisan pushback to the last DHS secretary.

[Mark Short]

Well, senators like their own. And so I don't think there's any doubt the Senate will confirm Mark Wayne Mullen. So that that's a plus as far as who the replacement pick is. But again, I think that the policy is not going to change. The policy is still being driven by the White House and by Stephen Miller on homeland security issues. And so, yes, you might have a different face for them, but you're not really going to have a change in the policies. But I really think this is at this time when we're at war with Iran. It's a real opportunity for Republicans to be pushing the fact that Democrats are refusing to fund homeland security when you know there's sleeper cells in this country. And instead there's so much chaos that you're actually not allowed to get on office and prosecute the case against Democrats for not funding it. Instead, you're sitting here having news interviews every day about the chaos with the outgoing secretary and what are the chances for the new secretary. And so Republicans are really missing an opportunity here politically to be scoring points about Democrats keeping DHS shut down.

[Joe Matthew]

Speak to us about the significance of this change. You saw a lot of Cabinet secretaries come and go in the first term. The president has been very careful to not give anyone the opportunity to use the word fired. And I think a number of folks reached for that lie at first to be fired. Well, then there was Michael Walsh, but he didn't get fired either. Do we just reassign people now? You send them to another parish in this second term?

[Mark Short]

I think that there's probably been too much sensitivity to that. And yes, I think I'm not offering a vote of confidence when you're having constant turnover. But frankly, I think Americans sent Donald Trump in part because of the role he played on Apprentice Apart. They wanted somebody to go to Washington, D.C. and fire them all and basically take a wrecking ball to Washington, D.C. and so how much that really hurt him, I don't know. And I, I, I, I've questioned a lot of his picks in the second administration and I think probably would have benefited from replacing some of them sooner.

[Joe Matthew]

Wow.

[Tyler Kendall]

We did promise that we would ask you about foreign policy, and you already brought it up in some ways, too. There's reporting that congressional Republicans are bracing for this White House to ask them for a supplemental funding request for the Pentagon to help bolster our own defenses. As the Iran campaign continues, I'm wondering if you have any sense of how much money we're potentially talking about here and what the appetite right now is on Capitol Hill, but the pressure to make sure that we are adequately funding as the military operation continues.

[Mark Short]

I would imagine you see a pretty large ask. And I think the reality is, is that in the time of war that those are generally approved by Congress and it's proceeds if you're voting against our troops, if you're opposed to it. And the reality is that, you know, I think that truly this is a transformational opportunity for President Trump. I applaud his decisions. I think after 47 years of all the attacks, whether it's our embassy or whether the attacks in Beirut or funding Hamas and Hezbollah, the fact that Iran for 47 years has been prosecuting a war against the west and demanding death to America and death to Israel, it's about time that we actually had this action. So I plot them for it. But Tyler, I think the concern that I would have if I'm in Congress elected Republican is that I think the president lowering energy prices for the first 15 months masked a lot of his trade policy implications. Now that you have energy prices spiking, I think you see the real downside of these tariff policies and you see inflation coming back as you're heading into the midterms. And so I think it's a plaud the foreign policy move. But I think they're really significant implications you had in the midterms. If you continue to see inflation like

[Joe Matthew]

this, you would have been walking over this supplemental request. Right. In the old days, as the head of pledge affairs in the White House, Democrats are going to say, whoa, I thought we had the first trillion dollar budget in history for the Pentagon and it just went up by 50%. Why do we need more?

[Mark Short]

Well, you know, the reality is that our deficits are so far out of control that actually we're now at 3% of GDP and is being is going toward defense spending, which is the lowest it's been since World War II. Joe. So we've actually been underfunded.

[Joe Matthew]

So this is about catching up.

[Mark Short]

I think it is. Now, I know to be fair, there are plenty of people inside this administration who argued for more cuts initially to the Pentagon, which I think was wrong. But I think we have been underfunding it. But I think at times, I think typically when you're going to see something like this is you'll see other stuff put in the bill because, because again, there's a notion that Congress is not going to vote against something that's proceeded so against our troops when they're at war. And so you can find you can attach a lot of things to a bill like that. Yes.

[Joe Matthew]

The memories, whether that's coming from the

[Mark Short]

White House or it's coming from Congress.

[Joe Matthew]

Understood. They'll either see the Democrats on board.

[Mark Short]

Yes. They'll see this thing going through. Yes. Let me jump on board.

[Joe Matthew]

Thank you, Mark.

[Tyler Kendall]

All right. Mark Schwartz, former chief of staff to Vice President Mike Pence and former White House director of Ledge Affairs. I'll echo. Joe, it's always nice to see you in person. We want to continue this conversation and bring in Christina Ruffini, Bloomberg this weekend. Co host. She always has one eye on geopolitics. So, Christina, the big news today, President Trump calling for unconditional surrender, but then also nodding at the fact that the US Wants to have a say when it comes to the next leader of Iran. Can you just give us the latest? What do we know about the administration's thinking here? When President Trump said earlier this week that a lot of the contenders they've been eyeing have been killed in the

[Bloomberg Host]

airstrikes, I think that's a pretty startling admission. I'm not sure that was something most people would recommend you say out loud. But I also think it's very the odds are slim that the United States is going to have a real say into who the next leader of Iran is. Right. This is a very entrenched regime that has been there since the revolution. They do still have some support on the ground. And there are layers and layers and layers of these loyalists, all of whom have going to be and will be vying for this top spot. It also the US Found this out the hard way when they put who they wanted in charge of Iran. And then there was this thing called the Iranian Revolution. And that's how we got the guys we had until very recently. So there is a long standing issue with puppet governments, especially in the region, especially in Iran. And if the US Is looking for a more durable solution and a more US Friendly solution, people in Iran do not like this regime. People in Iran, you know, the average person is I've talked to some Iranian friends, are grateful that the ayatollah is gone, but they also don't want to be a puppet state of the United States. And finding something in the middle there is probably the best solution. Now, whether or not that's going to happen, I think there's no way we can tell at this point.

[Joe Matthew]

Christina, US Intelligence seeing no signs of uprisings or defections. As we approach the one week mark here, what does that tell you? Is that a sign of stability in what's left of the regime or the fact that as we just established, we've taken so many people off the board?

[Bloomberg Host]

I think it's, I think it's that. I think it's a couple things. It's also fearful. People are hunkering down. I mean, I talked to a woman who said she doesn't even know where her family is because last time they bombed, they left Tehran and went out into the mountains to try to be safe. People are not home, people are not organized. People can't communicate. It's really hard to organize a protest against the repressive regime if you can't even talk to one another. WhatsApp, these messaging signals have been shut down for the most part by the regime. And it's also the irgc. It has been significantly degraded by the United States and by Israel, but it does still exist. You know, the President openly offered amnesty to IRGC members, to people who would defect and be willing to come into the fold. And to your point, we haven't seen a lot of that. I think the President was trying to export the Venezuela model here. These are very different countries with very different political systems. And it may not go as quickly as he had hoped.

[Joe Matthew]

Well, I'll tell you something, it's. It's a pretty good situation when one of the best analysts you have on this also is hosting her own program. And that's Ms. Ruffini along with David Gurd. Bloomberg this week and we just started a week ago. Tomorrow morning at 7am you will have the very latest on this. And I'll remind you that it was Ms. Ruffini who walked you through the initial stages of these strikes one week ago, minus one day. Ruffini and Gura only on Bloomberg. Thank you, Christina. I'm Joe Matthew alongside Tyler Kendall. We're live in Washington. Stay with us. On balance of power. We'll have much more coming up after this.

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[Bloomberg Host]

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[Tyler Kendall]

We want to dive deeper into the economy because today, of course, we got the jobs report. US Employers unexpectedly cut jobs last month and the unemployment rate rose. To discuss, we're joined now by Liz Pancati. She's the managing director of Policy and Advocacy at the Groundwork Collaborative. Liz, it's good to see you. The figures today seem to be calling into question whether or not the labor market is actually steadying. Our own analysts at Bloomberg Economics right. That the decline was partly due to a combination of temporary disruptions. I'm wondering if you can take us through this and what you're gleaning from the data we got today.

[Liz Pancati]

Yeah, so this morning the Labor Department. The Labor Department reported that jobs were down about $100,000, $100,000, 100,000 jobs last month. That cut was primarily driven by a temporary work stoppage of some doctors and physicians. A couple of healthcare strengths going on last month. The issue with that is that over the last year, the only sector driving the vast majority of job growth has been the health care one. And so the precarity of that was really shown over the past month that a temporary strike of really not that many workers in the grand scheme of things was able to tip our labor market into the negative. We saw declines in transportation and warehousing and manufacturing and construction across the board. Things are really clearing up that the picture in the labor market is not good.

[Joe Matthew]

So what was the weather? We're actually hearing that that was part of the blame was the weather obviously being sort of cute here. So take the weather. We, we had what, Snow Creek and everybody was locked in their house for a couple of weeks. Remove the storm, remove the strikes. What would this number have looked like?

[Liz Pancati]

You know, I think what we have seen is really a stagnating labor market. But I will note that, you know, the Labor Department revised down the December number considerably such that that went into the negative. The January revision wasn't as extreme. But I think if you look at the kind of three month, six month picture that's a little less noisy, we are seeing at best stagnation and at worst a tip into the red that is here to stay.

[Tyler Kendall]

So we did hear from the administration on these numbers earlier today. The NSC director, Kevin Hassett joined Bloomberg Television and radio with Jonathan Ferro earlier and he said at this point, the administration isn't concerned by the data. Let's take a listen, get your reaction on the other side.

[Kevin Hassett]

Net, it's almost like a wash number. There's a new procedure, birth death model at the bls, which we believe is going to make the number more volatile. And so I think more and more we're going to have to average through the months. And remember, we had a really surprisingly positive number last month. And I think if you average the two, then it's about at the rate of job growth that's consistent with 3 or 4% GDP growth.

[Tyler Kendall]

So is this more a math, A math problem? When you're hearing the NEC director, they're talking about maybe some of the broader contexts that we should be taking into account.

[Liz Pancati]

In my opinion, no. If you take the last three months of job growth and you average them, you get about zero. And so I'm not sure that's what you're looking for in a roaring economy is job growth of zero. We also saw pretty concerning ticks down based on some population adjustments to labor force, labor force participation rate and to the employment population ratio that I'm keeping an eye on over the next few months to see if those are sustained. But you know, reports from this morning are that we wiped out about four years of gains in both of those, which from a, you know, broader picture perspective is really not great. Wage growth is slowing and as we know, you know, looking at prices, we saw a big beat on PCE the week before last. And as the Fed heads into meetings here in the next couple of weeks, they are looking at rising prices. You know, oil above 90 this morning, commodity pressures, given the war on Iran, plus a real big bust this morning on jobs. It's not a great picture.

[Joe Matthew]

Well, that's what I wanted. And so what the heck do you do if you're the Fed here? You look over the course of a year, zero job growth and what else is new today is ninety dollar a barrel oil.

[Liz Pancati]

Yeah, it's not just oil. I mean, the number of commodities that come from through the Strait of Hormuz. You've got fertilizer, which has already been affected over the last year by President Trump's tariffs. You got rare earth minerals affecting clean energy and other imports. I just think the commodity picture is really likely to, to show more of what we saw in PC.

[Joe Matthew]

How about $4 a gallon gas? We talked to Tom closer earlier from Gulf. He made that prediction. I mean, that could be on our doorstep any minute.

[Liz Pancati]

I think what we saw out of CENTCOM yesterday is that they're expecting this war will not end until September at the earliest. Jet fuel is up massively. I mean, summer airfare is going to be a problem and so will prices at the pump.

[Tyler Kendall]

Yeah, well, to that point, we're not at $4 yet, but triple A this morning saying the national average is at about $3.32 a gallon. How does this impact the broader consumer spending picture when you have Americans paying more for their everyday essentials? Or does a lot of that have to depend on the timeline, just how long they will be willing to pay for those things that they need to get along in their lives?

[Liz Pancati]

We have seen over the past year, you know, we're about a year out from Liberation Day and those tariffs that have ticked on and ticked off, obviously with the Supreme Court IPO ruling last or the week before last, and then President Trump imposing Section 122 tariffs at 10 and now at 15%, according to Treasury Secretary Besant. Those that pass through takes about six to nine months, just given what's on the shelves. And when it hits these other supply shocks driven by the war in Iran and these commodity prices, those will show up considerably faster. And now consumers are going to be really taking it from both sides. And they were already struggling to stay above board with what we were seeing with the tariff picture. So I'm really worried about pressures, especially on those lower and middle income consumers.

[Joe Matthew]

Are you, Liz, at groundwork? Are you factoring in or is it even possible to quantify the impact of AI? Is there a chance that we look back at this last year and say, oh wow, it's very obvious what happened. I changed the job market permanently and brought efficiencies that we never could have forecast.

[Liz Pancati]

You know, I think we're seeing some evidence of some productivity gains in some concentrated sectors, but across the board we are not seeing that bear out. You know, I've seen the estimates from Goldman and Brookings and from others. I think what we are, what we are looking at it at groundwork is are we seeing job quality decreases, declines? We are really not seeing differences in hours or in pay show up in the job market yet. We are seeing in some of those earlier career workers less hiring in those industries that drive young adult labor market outcomes. But so far we're not seeing a ton in AI productivity gains. What I will say is that a lot of companies are using AI enabled pricing techniques which are actually allowing them to grow margins and, you know, grow productivity by way of increasing prices. And that of course will trickle down to consumers in unfortunate ways. So I'm not sure we've seen an entire, you know, redo of our economy yet to be determined, I think. But from from my perspective, we are not seeing evidence of that and that is not driving what we're seeing in the picture of economic growth or the labor market.

[Tyler Kendall]

In the final minute we have you. I wanted to go back to tariffs since you did mention it. And we hear the administration talk a lot about how tariff revenue is an offset to those tax cuts in the one big beautiful bill. And we didn't get to it today on the program, but there is this murmuring that we could see of reconciliation package 2.0. I'm wondering what you're gaming out here when it comes to the fiscal health and the balance sheet of the country. If we've seen the Supreme Court strike down those broad based tariffs, but the administration still using other authorities, yeah, that

[Liz Pancati]

Section 122 authority can be in place for about six months. And so we'll see that play out here over the next six months. There are obviously other authorities. The administration has announced a number of section 301 investigations which just take time to play out. And you could see Congress kind of reassert their role in trade and tariff policy. You know, I haven't seen appetite for that on Capitol Hill in my conversations on either side of the aisle. So I wouldn't hold our breath for that reconciliation package. But. But from the administrative authorities that the president has, he seems to have. No, no, he's not holding back on using those. So I think it'll be mostly driven by those actions.

[Joe Matthew]

We only have about 30 seconds, Liz. Could we be in the second half of the year talking about the benefits of massive tax returns that the president has been predicting?

[Liz Pancati]

Not in my opinion, but I think really, I'm not sure if folks will have their tax returns by the end of the year given the cuts to the irs. I mean there are really slowing down customer service and processing returns over there.

[Joe Matthew]

It's great to have you back. Liz Pancati. It's been too long. Groundwork Collaborative. Many thanks for your insights as always, Liz, and being part of our conversation. Thanks for listening to the Balance of Power podcast. Make sure to subscribe if you haven't already at Apple, Spotify or wherever you get your podcasts. And you can find us live every weekday from Washington, D.C. at noontime [e-mail] we buy insurance for peace of mind. But every year millions of claims are denied not because people did anything wrong, but because their policies quietly excluded what happened. Insurers know every detail. Policyholders rarely do. That's why my policy advocate exists for just 27 cents a day. Their platform reads your policies and explains where you are vulnerable. They don't sell insurance. They deliver transparency. Before you trust your policy to protect you, let my policy advocate tell you what it really says. Go to mypolicyadvocate advocate.com.

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